Yahoo!: CFO Goldman Directs Street to ‘Search Click Revenue’

By Tiernan Ray

During a conference call this evening to discuss Q3 results, Yahoo! (YHOO) CFO Ken Goldman addressed the company’s reduced outlook for the year.

“We remain ever more confident in our business over the long term,” said Goldman. “We are lowering our outlook to reflect performance so far this year, and expectations for Q4 seasonality.”

Beyond the current quarter, said Goldman, “We expect overall a leveling of our expense growth.”

CEO Marissa Mayer, in her opening remarks, focused on calling out trends that are going well for the business, with the caveat that “it will take some time for today’s increased engagement to turn into revenue, but we remain confident.”

Yahoo!’s page views in the quarter rose to levels last seen in 2011, “erasing two years of erosion,” said Mayer. Mayer said the reversal in traffic decline was “unprecedented” for a Web company, and a testament to the company’s progress in revamping its products.

Mayer said the total monthly user count of more than 800 million was a record in the company’s history.

Monthly users on mobile devices topped 390 million, said Mayer. That was up 15% from the prior quarter. “Yahoo!’s future is mobile,” she remarked.

The figures were detailed in a slide covering quarterly metrics:

Revenue at Alibaba Group Holding, the Chinese e-commerce giant, in which Yahoo! holds a 24% stake, rose 61% in the quarter ending in June, the company said, to $1.74 billion. Yahoo! reports Alibaba results one quarter in arrears. Net income was up 145% at $717 million.

While Q3 revenue was down 1% thanks to a 7% drop in display ad revenue, Goldman urged analysts to consider a new metric, “search click revenue,” which it defines as “gross search revenue (before TAC) based on internal data, excluding China and Japan (where Yahoo-branded sites are operated by third-party licensees), Korea, and Microsoft RPS guarantee.” Goldman said the new metric more accurately reflects the progress in the business. Search click revenue was up 16% in the quarter from a year earlier.

Goldman includes the new metric in a slide comparing revenue trends over several quarters:

Yahoo! shares are up 2 cents at $33.33 in late trading, erasing gains of about 5% right after the report came out.

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There are 3 comments

OCTOBER 15, 2013 5:50 P.M.

Anonymous wrote:

Big fan of the Mayer. Big fan. Having Tumblr and Flickr is super but Yahoo has to take on YouTube. They can do to Google re YouTube what Samsung did to Apple. For the offering: Pick a catchy name. Hmm. And your model re revenue streaming should try to take on ad clicks that are page and directed etc. No sweat. Hurry and bring on the Apple developer community and gamers. Create individual channels. Create open source 2d/3d animation development...

OCTOBER 15, 2013 6:19 P.M.

Parkite wrote:

Progress in revamping its products? Not for the end user. Every recent redesign has been a step backwards. See sports and mail.

OCTOBER 15, 2013 7:52 P.M.

Anonymous wrote:

Display revenue ex-this and ex-that. Just a little better than saying earnings before expenses.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.